THE two-year cabotage exemption in Sabah has failed to reduce the price of goods in the state, said Deputy Sabah Chief Minister Wilfred Madius Tangau.

He said based on the Sabah Shipping Board records, the number of direct calls from foreign liners declined from 3,778 in 2017 to 3,280 in 2018.

“Roughly, in the span of one year since the exemption the number of direct calls to Sabah was not as how we expected,” he said at a function held in Kota Kinabalu. 

“However, there’s an increase in the number of TEUs handled by Sabah Ports. In 2017, the number of TEUs handled were 353,155 and it was 386,789 in 2018,” he said, referring to Twenty-foot Equivalent Units, which is a measure of cargo volume based on the capacity of a 20-foot shipping container.

He said the Transport Ministry is expected to carry out a six-month study in November on the effectiveness of the cabotage policy exemption. 

The cabotage policy exemption for Sabah and Sarawak was implemented by the Barisan Nasional government on June 1, 2017. 

The exemption was to address complaints that the policy was behind the higher cost of imported goods in Sabah and Sarawak compared to the peninsula. 

The Federation of Sabah Industries (FSI) also blamed the restriction on foreign ships from picking up goods in the state for weakening exports of Sabah goods, leading to investors thinking twice before investing in the state. 

“FSI still talks about cabotage policy. They keep telling me to remove the cabotage policy. Everyone blames the national policy for being the reason why there are not enough investments coming to the state,” Tangau said. 

“Now it has been two years. Until today, no shipping liners have registered at Sepanggar Bay (port). So, what does this tells us. It tells us that it is not because of this cabotage policy, they are not coming here,” he said. 

The cabotage policy was introduced in December 1980 to protect the Malaysian shipping industry by limiting the activities of foreign ships on domestic routes.  

Over the course of 39 years, the cabotage policy had been been partially liberalised to help industry players in Sabah and Sarawak, until the exemption in 2017.  

Tangau said not enough volume as one of the reasons why the state’s shipping industry has not improved. 

“But Sabah Ports Authority told it is different problem. For instance the Sepanggar Port wharf is only 500 metres, and the shipping operators need at least 1km of wharf. 

“Then the question of depth of our wharfs, the depth must be some 14m, at the moment Sepanggar Port is only 11m, and we have to dredge first before the foreign ships can call at the port,” he said. 

Tangau said another reason given by the local ports authority was that shippers need at least four cranes to load and unload containers, while Sepanggar only has two. 

“They want to achieve at least 25 containers handled per hour. At present, with the two cranes, it’s only 19 containers per hour,” he said.

As for the Palm Oil Industrial Cluster, which operates its own port in Lahad Datu, shippers would call on Sabah ports only if at least 500,000 TEUs are handled, but Sabah is only handling around 300,000 TEUs annually. 

Tangau, who is also state industrial development minister, said Sabah needs funds to upgrade its ports and it may go into debt with the federal government to do so. – August 24, 2019.